Commissioner Of Income Tax-I, Ludhiana v. M/S Marshal Timber Merchants, Samrala Road, Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A No. 5 of 2008 Date of decision : August 26, 2008 Commissioner of Income Tax-I, Ludhiana ...... Appellant through Mr.Rajesh Sethi, Advocate v. M/S Marshal Timber Merchants, Samrala Road, Ludhiana ...... Respondent through Mr.K.L.Goel, Advocate CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI *** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? judgment ? 2. To be referred to the Reporters or not ?3. Whether the judgment should be reported in the Digest ?3. Whether the judgment should be reported in the Digest ? *** AJAY TEWARI, J This appeal, filed by the revenue, raises the following questionsof law :- “1.Whether on the facts and law, the Hon'ble IncomeTax Appellate Tribunal was justified in deleting thepenalty when the application of assessee u/s 254(2) wasallowed to decide afresh only the issue of `limitation u/s275(1)(a) and whether on merits of levy of penalty u/s271(1)(c) review was permissible when the same wasalready decided in order dated 16.11.2005 ?ii)Whether on the facts and law, the Hon'ble IncomeTax Appellate Tribunal was justified in deleting the penalty on the ground that requisite satisfaction u/s 271(1)(c) was not recorded, when the Assessing Officer hadmentioned in the assessment order that penalty notice u/s271(1)(c) had been separately issued ? The respondent/assessee-firm was engaged in the business ofmanufacturing and resale of timber goods and had filed its return on3.10.1989 for the assessment year 1989-90 declaring income of Rs.38,310/-.Subsequently, on 21.3.1990, the Assessing Officer received someinformation, and on inquiries it was found that certain bogus purchases werealleged to have been made by the assessee. Accordingly, the assessmentorder was made on 27.11.1990 after making addition of the inflatedpurchases, which was confirmed by the CIT(A) and the ITAT, ChandigarhBench. On 20.7.2001, the Assessing Officer imposed a penalty ofRs.20,160/-, under Section 271(1)(c) of the Income Tax Act, 1961 @ 100%of tax sought to be evaded. This order was also upheld upto the Tribunalwhich, vide its order dated 16.11.2005, dismissed the appeal. Thereafter,the assessee filed Miscellaneous Application under Section 254(2) of theIncome Tax Act, seeking rectification on the ground that the order imposingpenalty was barred by limitation. By order dated 3.10.2006, the originalorder was recalled by the Tribunal. However, by the subsequent impugnedorder dated 29.12.2006, the Tribunal allowed the appeal of the assessee onthe ground that the Assessing Officer had not recorded his satisfactionbefore proceeding under Section 271 of the Income Tax Act. Learned counsel appearing for the revenue argued that it wasnot open to the Tribunal to review the order on a completely differentground, since as mentioned above, the Miscellaneous Application filed by I.T.A No. 5 of 2008 the assessee had been allowed only on the ground of limitation. We find considerable force in the argument of learned counselfor the revenue. It is correct to say that review cannot mean rehearing. Theground that the Assessing Officer had not recorded his satisfaction wasavailable to the assessee for filing the appeal. In any case, as mentionedabove, the Miscellaneous Application filed by the assessee was only on theground of limitation. In the circumstances, we answer the questions posedin favour of the revenue. Consequently, this appeal is allowed, theimpugned order of the Tribunal, dated 29.12.2006 is set aside and the caseis remitted to the Tribunal to decide the Miscellaneous Application filed bythe assessee afresh, in accordance with law. ( AJAY TEWARI ) JUDGE August 26, 2008'kk' ( ADARSH KUMAR GOEL ) JUDGE